find the questions below for details

Question 1

For this year, JJ company has 20,000 net earnings on income statement and 7,000 net cash inflow from operating activities, 15,000 net cash outflow from investing activities, and 20,000 cash inflow from financingactivitieson the statement of cash flows. What is the accruals total reported for this period?

0

5000

7000

13000

Question 2

Which is the measurement basis for Marketable securities in B/S?

Current or past value

Fair value or amortized cost

Past value adjusted for depreciation

Expected future value

Question 3

A company changed its method of inventory pricing from last-in, first-out to first-in, first-out during the current year. Generally accepting accounting principles require that this change in accounting method be reported by:

a.

Accounting for the effects of the change in the current and future periods.

b.

Showing the cumulative effect of the change in the current years financial statements and pro forma effects on prior years financial statements in an appropriate footnote

c.

Disclosing the reason for the change in the significant accounting policies footnote for the current year but not restating prior year financial statements

d.

Applying retroactively the new method in restatements of prior years in the current10-k or10-Qand appropriate footnote disclosures

Question 4

M18-O1-Comprehensive 2009:

Which of the following statements isnot true?

a.

The comprehensive income should be reported only on income statement below the net income figure.

b.

The comprehensive income is defined as a "change in equity (net assets) of a business for a period.

c.

Under US GAAP,the comprehensive income is required to be reported because I/S cannot catch all wealth changes for the year.

d.

Comprehensive income is a concept basedoncapital maintenance concept.

Question 5

cc1-2 O2-objectives:

The basic purpose of financial reporting is to:

a.

Directly measure the value of a firm using historical costs of resources

b.

Provide information for firm value, past performance, and risk factors

c.

Show a firm's future stock price

d.

Provide information about a firm's resources in terms of market value

Question 6

In the Apple Tree article, we discussed for a couple of ways to value business: earnings capitalization vs. discounted cash flows. Which one correctly shows the sequence of earnings capitalization process?

forecast of I/S-> forecast of annual earnings for business life --> determination of the cost of equity ---> Calculation of present value of future earnings.

determination of cost of equity-> forecast of annual earnings for business life -->forecast of I/S---> Calculation of present value of future earnings.

Calculation of present value of future earnings-->determination of cost of equity-> forecast of annual earnings for business life -->forecast of I/S

determination of cost of equity-> forecast of annual earnings for business life-->Calculation of present value of future earnings-->forecast of I/S.

Question 7

cc3-1 01-earnings quality:

Which of the following contributes to high quality earnings?

a.

Gains or losses resulting from debt retirement.

b.

Frequent changes in accounting principles.

c.

Write-off of assets from corporate restructuring.

d.

Cash salesgenerated from repeat customers

Question 8

cc2-5The definition of fair value in SFAS No 157(FASB ASC 820)is based on:

a.

Replacement cost

b.

Historical cost

c.

Entry price

d.

Exit price

Question 9In stock markets. investors and financial analysts prefer to use proformaearnings. There are several reasons that they are using this figure instead of GAAP earnings. Please discuss the following questions

What is proformaearnings? Is there any policies regulated by the SEC for proformaearnings?(2 points) What are the advantages and disadvantages of proformaearnings compared with GAAP earnings in valuing firms in the markets? (3 points)

Question 10

M17-O3-EPS 2009:

Which of the following statements isnot true?

a.

If managers cannot meet aforecastedEPS in the market, they are willing to change firm's operation to meet or beat it.

b.

EPS is one of the most popular performance measures that are used in the market because it cannot be manipulated by managers.

c.

Sometimes managers release a forecast of EPS and it may cause managerial short-termism.

d.

Every company listed on the US stock markets should report the basic and diluted EPS

Question 11

There are several ways to manage earnings(earnings management)which may reduce earnings quality.The one-time overstatement of restructuring charges to reduce assets,which reduces future expenses,is the definition of which of the following earnings management techniques?

a.

Abusing the materiality concept

b.

Creasing cookie jar reserves

c.

Taking a bath

d.

Creative acquisition accounting

Question 12

M5-O1-Capital M2009:

Which of the following statements isnot truein measuring earnings?

a.

Capital maintenance approach is more related to measurement problem, while transaction approach is more related to revenue recognition issues.

b.

the transaction approach is more focused on the accounts on balance sheet.

c.

The current GAAP is more based on the transaction approach.

d.

For the income measurement, there are two approaches such as transaction and capital maintenance

Question 13

cc2-2 free cash flows 2009: Some users in the markets prefer to use free cash flows as a performance measure instead of earnings.For this year, JJ company has 10,000 net earnings on income statement and 7,000 net cash inflow from operating activities, 5,000 net cash outflow from investing activities, and 2,000 cash outflow from financingactivitieson the statement of cash flows. What is the best estimate of free cash flows for this year based on the information above?

a.

15000

b.

3000

c.

5000

d.

2000

Question 14

M8-O1-earnings quality 2009:

Which oneis nota main question when you evaluate earnings' quality?

a.

Debt to equity ratio and total amounts of liabilities.

b.

Gross profit ratio

c.

Source of revenue and persistent of revenues

d.

Relationship between earnings and the market price of the common stock

Question 15

The article of "LucaPacioli" discusses the origins of accounting system. Measuring firm's performance has always been an important task for several reasons. The article introduced a couple of interesting relations.

One of that is the relationship between "reasonable profit" and business goal". We may conjecture the meaning of "reasonable profit" although the article did not clearly define it. Please discuss how "reasonable profit" can be defined (3 points). Also discuss how it is related to earnings quality we discussed in class (3 points)